Chinese President Xi arrives in Portugal to boost trade ties

LISBON: Chinese President Xi Jinping arrived in Portugal on Tuesday (Dec 4) for a two-day visit to boost economic ties, despite concern in some EU capitals over China’s growing influence across the continent.

“Relations between China and Portugal are entering their best period… We must develop existing projects and step up our commercial exchanges,” Xi said at a meeting with counterpart Marcelo Rebelo de Sousa.

His two-day stay will include the signing of cooperation agreements, one of which will bring the southwestern port of Sines into what China calls the “new Silk Road”.

The initiative offers loans to build railways, roads and ports across Asia, Europe and Africa.

“Portugal is an important hub in the land and maritime silk routes,” Xi said. De Sousa added Sines was “the symbol of a partnership which we want to continue to build.”

Andre Verissimo, editor of the leading business newspaper Jornal de Negocios, said: “If Portugal joins the initiative, it will become the first country in western Europe to do so.”

Portugal, one of western Europe’s poorest countries, opened to Chinese investment after being hit hard by the 2008 global financial crisis.

Investment from China accounted for 3.6 per cent of Portugal’s GDP between 2010 and 2016, according to figures from Spain’s ESADE business school.

But China’s growing influence in Europe, welcomed by Greece and several eastern European countries, is viewed warily by others on the continent.

At the initiative of France and Germany, EU countries last week agreed a framework regulating foreign investment, particularly from China.

Portuguese Prime Minister Antonio Costa said that Lisbon did not back the idea and was relieved that the final accord provided for only an advisory role on the part of the European Commission.

“In Portugal, we are not anxious by the origin of foreign investment,” Costa said, asking Europe to eschew “the path of protectionism.”

SEEKING ‘LARGE-SCALE INVESTMENT’

China now owns a 28 per cent stake in Portuguese energy utility EDP, the country’s largest firm, via China Three Gorges and China’s state-owned international investment company CNIC.

It also has a stake in Portugal’s biggest private bank, BCP, and its leading insurance company, Fidelidade. According to estimates, Chinese investment in the country could total US$12 billion.

Perhaps the most contentious issue is China Three Gorges’ bid to take a controlling stake in EDP, of which it is already the main stakeholder. The operation, launched in May, involves some nine billion euros.

But while it has been welcomed by the Portuguese government it still risks running foul of barriers imposed by regulators in around 15 countries where EDP operates — including the United States.

China has risen to Portugal’s 11th-largest trade partner in the decade since 2008, when it was 28th on the list.

Read more at https://www.channelnewsasia.com/news/business/chinese-president-xi-arrives-in-portugal-to-boost-trade-ties-10997104